Daily Brief Macro: EM Watch: Have Copper markets been hit by a bus full of tourists or by the Chinese economy? and more

• Copper markets have been on a tear in recent months and our assessment is that the positive sentiment started when Chinese copper stock data points started supporting the notion that China was “hoarding” Copper concentrate ahead of 1) a devaluation, 2) an overhaul of the electrical grid or 3) a power grab on supply chains for EVs, Solar Panels, Data centers and the likes.
• On top of this, we have seen how US officials have highlighted the option of creating a strategic reserve of Copper Cathode in the US, potentially in response to the stockpiling of refined copper seen in China (chart 1).
• Why is the Chinese copper stock not receding here? That is the question macro-managers and geopolitical pundits are asking themselves daily!

• First major technical resistance for HSI and HSCEI has been met with force and a consolidation/correction begins
• Market breadth expands over last month presenting investment opportunities beyond tech and mega-cap
• Short and long term sentiment indicators going positive as most analysts continue to look in rear view mirror

• A weekly review of recent events impacting our investment themes
• Regulators in seemingly global coordination raise margin requirements for certain commodities 
• Federal Reserve talks tough but the ingredients for inflation already baked in the cake.

• Dan Taniba moved to India 25 years ago, transitioning from the startup and venture capital world to public equities in 2007
• Discussion covers challenges of venture capital, investing in India, and the case for public equities
• Conversation delves into India capital’s perspective on various aspects of investing, with examples and personal anecdotes interwoven throughout.

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• The PMIs probably peaked in the spring, with the US’s jump beyond its peers in May setting it up for a more substantial drop during the summer.
• Residual seasonality from the pandemic-corrupted adjustment factors will likely exaggerate the US payback as part of a softening global story.
• A summer downturn should support the re-emergence of dovish debate in the US, where we still expect a September cut. However, global policy only looks a little tight.

• Singapore’s CPI inflation rate in April 2024 remained steady at 2.7% year-on-year, despite predictions of a decrease to 2.6%.
• This inflation rate is still lower than the one-year average.
• The core inflation rate matched predictions, with no change from 3.1%.

• Freight rates are rising rapidly again, and no news (from Gaza) equals bad news for those hoping for lower goods-inflation.
• Rates on benchmark routes are up 15-20% this week taking the monthly change above 50%, meaning that we are on a path towards doubling freight rates every other month.
• The routes from Shanghai to Europe and the US are both impacted despite the main trigger of the rising freight rates being the combination of a lack of shipping passage through the Suez paired with rising shipping volumes.

• The Bank of Korea has maintained the Policy Rate at 3.5%, consistent with the economic consensus, reflecting caution due to increased upside risks to prices from improving growth and exchange rate volatility.
• The global economic environment, characterized by differentiated monetary policies, geopolitical risks, and volatility in financial markets, will significantly influence future monetary policy decisions.
• Domestically, robust export growth and stable employment have led to stronger-than-expected economic performance. Still, financial stability risks from household debt and real estate financing necessitate a tight monetary stance.